The rapid growth of consumer demand constantly powers the consumer packaged goods industry. Nowadays, CPG suppliers have gained an opportunity to adapt their products to better meet diverse consumer needs.
However, CPG logistics remains a challenging task for manufacturers of all scales. Learn how to effectively improve your CPG delivery process.
What are consumer packaged goods (CPG)?
CPG stands for consumer packaged goods, a term that means items used by an average consumer daily. Due to their active consumption, CPG requires regular replenishment as we easily run out of foods, beverages, or household supplies.
In other words, consumer packaged goods are simply the products we need to perform our habitual routines. That is why the CPG industry is one of the largest economic sectors in the US, where it amounts to $2 trillion in trade turnover.
There is a range of features characterizing the nature of consumer packaged goods:
- High purchase volumes: orders for CPG are frequently large.
- Global distribution: CPG is needed in any part of the country.
- Low cost: prices for CPG are relatively low compared to the purchases of other types. That is, the CPG target audience involves literally everyone.
- Low buyers’ engagement: consumers spend little time picking CPG. Often, they choose the goods they have been using previously.
What are the challenges of CPG logistics?
According to the Boston Consulting Group, nearly 80 percent of CPG supply chain executives state transportation as their biggest challenge. That’s why outlining the proper logistics strategy is crucial for your CPG supply chain.
The replenishment of consumer packaged goods would be impossible without effective CPG logistics. There are some key CPG logistics challenges that you need to know to overcome possible struggles.
Many consumer packaged goods have a short shelf life, which means they have to be delivered within strict deadlines. Storing the dry goods or household items for some time is not a problem, but the major part of the food products will not survive the shipping delay.
On-time delivery is a number one priority for those shippers, who move freights on a regular basis (for example, delivering goods for retailers or shop owners). In this case, you will have to stick to a strict delivery schedule and pay much attention to planning activities.
It is important to remember that CPG often requires more time to be packed properly, especially fragile items, so make sure you count it when preparing your shipment. Also, try to preview the route you are going to use to avoid possible traffic congestions.
Since the CPG industry is extremely large-scale, it is often difficult to predict the actual demand for certain types of products. The CPG market is booming, and it is sometimes impossible to maintain sufficient capacity to deliver all the ordered goods, especially during peak or holiday seasons.
The constantly growing number of companies requires shippers to invent and imply new solutions in order to stay in the race.
High consumer demand and the inability of many transportation modes to provide the required capacity often result in increased transportation costs. Shippers are constantly searching for alternative solutions such as collaborating with other companies to share warehousing or truck space or combining loads for a full truckload shipment.
It is necessary to be aware of the strict compliance of CPG shipping. Product shortages, overages, and substitutions that sometimes occur in the process can lead to monetary fines. Shipping excess quantities attract lower penalties, however, the customer will probably not like the idea of being forced to pay for extra goods.
CPG supply chain strategy
To avoid the range of possible risks when transporting packaged goods, it is important to develop a strong shipping strategy. To achieve this goal, you need to be well familiar with the core specifics of CPG shipment. GoShip will help you to review all the necessities of CPG logistics.
CPG goods storage
Storage of consumer packaged goods is principal for a successful shipping flow. Both customers and manufacturers want to be certain that their products are transported according to all the rules and nothing threatens their quality. This is why we recommend learning about the main features of CPG storage.
- Dry goods. As a rule, dry goods are quite easy to store, as they have a longer shelf life. That means you can use basic protection for them and thus reduce the transportation costs. Also, dry goods can be packed more compactly in the truck. Yet, certain types of dry goods will need more consideration to store them properly. For instance, dry food products have to be hidden from direct sunlight and stored with observance of temperature control.
- Perishable goods. Unlike dry goods, perishable products should be stored much more carefully. As they are meant to stay fresh after delivery, perishable goods are mostly transported in reefer trucks with a temperature regulation system. Using refrigerators will elevate any possibility of foods getting spoiled. For short delivery distances, you might think about applying diverse cooling supplies such as dry ice or insulated pads. Please note that dry ice is categorized as a hazardous material, so using it will have an influence on your freight class.
The appearance of transported goods directly depends on your choice of packaging method. If you want to make sure the product will be accepted by the customer after delivery, it is better to pay attention to proper packaging in advance.
Typically, CPG items aren’t large, so they get transported in crates. This is where you can use the crates’ space with maximum effectiveness, keeping your goods condensed inside as much as possible (if these items are not fragile and do not require additional packaging).
Due to their exceptional diversity, consumer packaged goods require you to precisely examine available packaging options. To pick the most suitable, we recommend you evaluate the product’s specifics and learn more about the main types of CPG packaging.
This type of packaging provides reliable protection and can be used for a huge variety of transported products. By choosing cushioned packaging, you will avoid any damage during transit. Additionally, you can apply air pillows as an inner packaging and thus reduce the risk of collision and movements of the products inside boxes.
Bubble film is the best choice for transporting household items or cosmetics – it prevents them from breaking or spilling out. Big volumes of the film work perfectly for fragile units, especially those containing glass elements.
Void fill is used to take up the space in a box and thus keep your items from unwanted movement. For smaller goods, the void fill will take up the space inside the bag to make the product packed hermetically.
There are a lot of types of mailers so that they can be used for the whole range of CPG except the fragile ones. Protective mailers are a good option for small amounts of goods; however, they can also accommodate bigger items.
Different kinds of bags will do the trick with many packaged goods that are not under threat of losing their shape during shipping. Additionally, certain bags are necessary as the inner packaging for the products. For example, waterproof bags ensure that the liquids remain contained.
In case you are not shipping your CPG in refrigerators, you might consider getting cooling materials such as dry ice bags or insulated boxes. These options are quite effective for delivering products over short distances.
Successful scanning operations would be quite complicated without labeling consumer packaged goods. Labels include a short description of the transported item as well as provide special shipping directions if there are any. Proper labeling saves time and effort as you don`t have to open up the boxes to check the containments.
Barcodes are the most common way to label crates with CPG. Barcode system enables fast and reliable data collection and improves product flow. Using barcodes allows customers to observe how the ordered items are moving through the supply chain. Moreover, the information inserted on the barcodes keeps the shoppers posted on the delivery time.
According to the research, about 70% of consumers make their purchase mainly relying on its brand packaging. That is why it is crucial to keep the original brand labels in the course of transporting CPG. Sometimes, customers are less likely to accept their goods if the brand labels are absent or have been damaged.
Brand recognition is a long-established feature of CPG customers, so even if you are shipping the products of a relatively unknown manufacturer, try to follow the principles of brand awareness.
Before condensing the goods into boxes, make sure they have brand stickers on top. In case you are delivering a big number of similar items to one customer, you may also want to place the branded sticker on the box so there is no need to unpack it every time.
Lately, sustainability has been one of the major trends of CPG packaging. Statistics prove that CPG logistics tend to develop by following modern consumer culture. A large part of active packaged goods shoppers is represented by millennials and gen Z people who pay much attention to green solutions. Being eco-conscious can significantly influence the order scale, that is why sustainable packaging is worth considering.
Replacement of materials is the key: eco-friendly alternatives can easily substitute traditional bubble wraps or packing peanuts. There are many opportunities to use craft papers or air pillows made of recycled plastic.
This will not only reduce the harmful impact on the environment but will also increase the attractiveness of your production. Besides, the manufacturing cost of sustainable materials is way lower than regular plastic packaging.
How to optimize the CPG supply chain
Shipping companies are permanently looking for workable options to resolve the key CPG logistics challenges and optimize the delivery flow.
- Palletizing. Using pallets for securing your freight is highly recommended as it provides reliable fixation for your cargo and facilitates its loading/unloading. Regardless of the number of boxes located on it, the pallet is considered a single piece which can significantly reduce the shipping costs.
- Understanding routes. When choosing a suitable shipper, make sure they are aware of the best routes to take to deliver the freight fast and safely. It will significantly reduce the risk of possible delays.
- Digitalization. If you are interested in updating the lifecycle of your business, you can consider applying shipping software for managing the orders volume and capacity, or using discounts programs. For better control over the shipping process, there is a wide range of shipment tracking systems. Using digital appliances can also help with the proper CPG labeling.
- Increasing carrier capacity. Often, there is a problem of lacking qualified drivers who are a determinant of a successful shipment. Besides driving itself, they sometimes provide loading/unloading services and control the delivery volumes.
CPG transportation modes
When it comes to picking the transportation mode of your CPG shipment, there are several critical factors to consider. You can go through a short checklist to come up with the right decision on the shipping way.
- Weight and volume of the load. The transportation mode choice mostly depends on the actual volume of units you are going to move. You will surely lean on the number of ordered units. Still, you can only evaluate the load volume after packing all the goods into boxes (or other packages). You will also have to weigh the items to see what type of truck suits you the most.
- On-time delivery. Pay attention to required delivery time – this is one of the highest priorities of CPG logistics. Different shipping modes provide different delivery time possibilities.
- Type of goods. Some kinds of CPG require special temperature regulations or additional protection in order to save the products’ freshness and shape.
Full truckload shipping
Full truckload (FTL) shipping mode gives an opportunity to move loads with a weight of up to 45,000 lbs. In this case, you get the whole vehicle solely dedicated to your shipment. Thus, you can be sure the CPG will be delivered on time as the driver doesn’t make any extra stops and goes directly to point B.
Less than truckload shipping
Less than truckload (LTL) shipping is based on sharing the truck space with other customers, which makes this transportation mode more affordable. However, the delivery delays are possible due to longer pick-up and drop-off procedures. LTL shipping weight limit is 20,000 lbs.
Refrigerated (reefer) shipping is an irreplaceable method of shipping perishable packaged goods such as food, medicines, or cosmetic products. Reefer trucks are equipped with built-in refrigerators and maintain climate control throughout your shipment. Besides, reefer vehicles have special protection from different weather conditions, which allows you to keep all the items fresh during transit.
CPG shipping rates
The price of your CPG shipment is formed following the actual weight and size of your load. In addition, the shipping mode and the type of truck you choose significantly contribute to transportation costs.
With GoShip, you can immediately get a quote and compare the rates from multiple carriers in real-time. Don’t hesitate to use our online calculator tool to summarize your CPG logistics cost.
CPG Shipping Services
We can help with competitive rates, more efficient processes, and optimized operations. The best way to calculate CPG logistics costs is to fill in shipment information and compare quotes. With GoShip.com, you can compare quotes from multiple carriers in real-time.